Term life covers you for a set number of years and costs the least. Whole life covers you for your whole life and builds cash value, but it costs much more.
Term life lasts for a set time, like 10, 20 or 30 years. If you die in that time, it pays. If you outlive it, it ends.
Whole life lasts as long as you pay. The price usually stays the same. Part of what you pay builds cash value you can borrow against.
The price gap is big. In NerdWallet data from February 2026, a healthy 30 year old man paid about $215 a year for a 20 year, $500,000 term policy. Whole life for the same amount was about $3,662 a year.
Term is often the right fit if you need coverage while you raise kids or pay off a house. Whole life can fit if you want coverage that never ends and can afford it for life.
Many term policies let you switch to permanent coverage later. Ask about this before you buy.
- Term: lower price, set number of years, no cash value
- Whole: higher price, lasts for life, builds cash value
- Term fits young families and home loans
- Whole fits lifelong needs, like a child with a disability
More questions
What happens when my term ends?
Coverage stops. Some policies let you renew at a higher price or convert to permanent coverage.
Can I lose a whole life policy?
Yes. If you stop paying, it can lapse. Big loans that are not paid back can also end it.
Is term a waste if I outlive it?
No. You paid for protection during the years your family needed it.
Words to know
- Cash value
- The savings part of a permanent policy. It grows over time and can be used for loans, cash, or to pay premiums.
- Whole life
- Permanent insurance that lasts your whole life as long as you pay. Premiums, death benefit, and cash value are guaranteed.
